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203 Cards in this Set

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A Product Defined

-A good, a service, or an idea received in an exchange.
-It can be tangible (a good) or intangible (a service or an idea) or a combination of both.
-It can include functional, social, and psychological utilities or benefits.

Why Buyers Purchase a Product

-To get the benefits and satisfaction that they think the product will provide
-Symbols and cues provided by marketing help consumers make judgments about products.

Consumer Products

Products purchased to satisfy personal and family needs

Business Products

Products bought to use in an organization’s operations, to resell, or to make other products (raw materials and components)

Items buyers are willing to expend considerable effort in planning and making purchases

Shopping Products
[Characteristics]

-Expected to last a long time; less frequently purchased
-Do not have brand loyalty appeal
-Require fewer retail outlets
-Inventory turnover is lower
-higher gross margins
-More amenable to personal selling
-Supported (servicing and promoting the product) by both the producer and channel members

Specialty Products
[definition]

Items with unique characteristics buyers are willing to expend considerable effort to obtain

-An identifying name, term, design, or symbol
-One item, family of items, or all items of a seller

Brand Name

-The part of a brand that can be spoken
-Words, letters, numbers

Brand Mark

-The part of a brand not made up of words
-Symbols or designs

Trademark

A legal designation of exclusive use of a brand

Trade Name

Full legal name of an organization

Value of Branding To Buyers

-Helps speed consumer purchases by identifying specific preferred products
-Provides a form of self-expression and status
-Evaluates product quality to reduce the risk of purchase

Value of Branding To Sellers

-Identifies and differentiates a firm’s products from competing products
-Helps in the introduction of new products
-Facilitates the promotion of all same-brand products
-Fosters the development of brand loyalty

Brand Equity

The marketing and financial value associated with a brand’s strength in a market

Brand Loyalty

A customer’s favorable attitude toward a specific brand

Brand Recognition

A customer’s awareness that a brand exists and is an alternative purchase

Brand Preference

The degree of brand loyalty in which a customer prefers one brand over competitive offerings

Brand Insistence

The degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute

Manufacturer Brands

Brands initiated by producers

Private Distributor Brands

Brands initiated and owned by resellers

Generic Brands

Brands indicating only the product category

Selecting a Brand Name

-easy to say, spell, and recall.
-indicate major benefits.
-suggest major uses and special characteristics.
-distinctive, set apart from competing brands.
-compatible with all products in line.
-designed for use and recognition in all types of media.

Protecting a Brand

-Surnames and descriptive, geographic, or functional names are difficult to protect.
-Registration with the U.S. Patent and Trademark Office protects a brand for ten years with indefinite renewals.

Degree of Brand Protection Through Registration [from MOST to LEAST]

-Fanciful
-Arbitrary
-Suggestive
-Descriptive
-Generic

Individual Branding

- naming each product differently
-avoids stigmatizing all products due to a failed product

Family Branding

-Branding all of a firm’s products with same name
-Promotion of one item also promotes all other products

Brand Extensions

-Using an existing brand name on a new product in a different category.
-Provides support for new products through established brand name and image.

Co-Branding

-Using two or more brands on one product to capitalize on the brand equity (customer confidence and trust) of multiple brands
-Brands involved must represent a complementary fit in the minds of consumers.

Brand Licensing

agreement whereby a company permits another organization to use its brand on other products for a licensing fee

-Development of a product that is closely related to existing products in the line but meets different customer needs

Line Extension Advantages

-Is a less expensive, low risk alternative
-May focus on the same or a new segment
-Can be used to counter competing products

Product Modifications

A change in one or more characteristics of the product and the elimination of the original product from the product line
-Product must be modifiable.
-Customer must be able to perceive modification has been made.
-Modified product more closely satisfies customers’ needs.

Quality Modifications

Changes in material or production processes related to a product’s dependability and durability
-Reducing quality to offer a lower price to customers
-Increasing quality to gain a competitive advantage

Functional Modifications

Changes affecting a product’s versatility, effectiveness, convenience, or safety; usually requiring redesign of the product

Aesthetic Modifications

Changes to the sensory appeal of a product such as altering taste, texture, sound, smell, or appearance

Assessing the potential of a product idea for the firm’s sales, costs, and profits:
-Does product fit in with existing product mix?
-Is demand strong enough to enter the market?
-How will introducing the product change the market?
-Is the firm capable of developing the product?
-What are the costs for developing and marketing?

Product Development

Determining if producing a product is feasible and cost effective:
-Construction of a prototype, or working model
-Testing of the prototype’s overall functionality
-Determining the level of product quality
-Branding, packaging, labeling, pricing, and promotion decisions

Deciding on full-scale manufacturing and marketing plans and preparing budgets:
-Modifications indicated by test marketing are incorporated into production design.
-Marketing, distribution, and servicing plans are finalized.
-Product roll-out occurs in stages to lessen risks of introducing new product.

Product Differentiation

Creating and designing products so that customers perceive them as different from competing products:
-Perceived differences in product quality, product design and features, and product support services
-Branding—crucial way to differentiate a product

Product Quality

-Overall characteristics of a product that allow it to perform as expected in satisfying customer needs
-Level of quality is relative amount of quality a product possesses.
-Consistency of quality is degree a product has the same level of quality over time.

Product design

-How a product is conceived, planned, and produced
-Good design provides a strong competitive advantage.
-Customers typically desire products with good designs and that function well.
-include specific design characteristics that allow a product to perform certain tasks.

Styling

physical appearance of a product

Customer services

-Human or mechanical efforts or activities that add value to a product
-Delivery and installation, financing, customer training, warranties and guarantees, repairs, online product information
-Competitive advantage when all other product features are equally matched by competitors

Product Positioning

-Creating and maintaining a certain concept of product in customers’ minds
-Product’s position results from customers’ perceptions of product’s attributes relative to those of competing products.
-Marketers emphasize characteristics most desired by target market (or segment) in advertising.

Perceptual Mapping

Bases for positioning

Perceptual maps

show marketers how closely products are conceptually positioned by consumers to “ideal points,” to their own products, and to competitors’ products.

Repositioning a Product

- Adjusting a product’s present position can strengthen/increase its market share and profitability.
- Accomplished by changing product’s features, price, distribution, or image.
- Adding new products to the line may necessitate in older products.

-An intangible product involving a deed, performance, or effort that cannot be physically possessed
-Application of human and/or mechanical efforts directed at people or objects

Intangibility

actions that have no permanent physical qualities as opposed to goods which can be touched and possessed over time.

Inseparability of Production and Consumption

cannot be separated from its consumption by the customer. Produced, sold, and consumed all at the same time.

Perishability

cannot be produced ahead of time and stored until needed.

Heterogeneity

Variation in the quality of services delivered by individuals and organizations

Client-Based Relationships

Interactions that result in satisfied customers who use a service repeatedly over time

Customer Contact

level of interaction between the service provider and the customer necessary to deliver the service

High-contact services

require the customer to be present during the production of the service and require well-trained and motivated service personnel.

Low-contact services

do not require the customer’s continuous presence while the service is carried out.

Package or bundle of services

-core services that are expected basic service experience.
-supplementary services that differentiate service bundle from those of other competitors.

Development of Services

-Marketers can customize services to match specific customer needs; can also offer standardized packages
-Marketers employ promises and tangible cues to help assure customers about quality of service
-Customer contact and other customers can affect service experience

Pricing of Services

-Performance of specific tasks
-Amount of time to complete the service
-Variable pricing based on the level of demand; high price at peak demand, lower prices when demand slackens
-Bundling of services requires decisions on unit, combination, or separate pricing
-Pricing as an indicator of quality is used when consumers have no other cues to indicate quality.

Distribution of Services

-Customers come to a service facility.
-Services are brought to the consumer.
-Services are provided at “arm’s length”, with no face-to-face customer contact.
-Marketing channels are short and direct, no or few intermediaries.
-Inseparability of service requires focus on service demand/supply management
-Accessibility to services increased by substituting automated equipment for contact personnel.

-Emphasizing factors other than price to distinguish from competing brands
-Advantage in increasing brand’s unit sales without changing price.
-effective when features are difficult to imitate by competitors and customers perceive their value
-Builds customer loyalty by focusing on nonprice features

Demand Curve

-A graph of the quantity of products expected to be sold at various prices
-Decreases in price create increases in quantities demanded.
-Increased demand means larger quantities sold at the same price.
-Prestige items sell best in higher price ranges.

Demand Fluctuations

-Changes in buyers’ needs
-Variations in the effectiveness of the marketing mix
-The presence of substitutes
-Dynamic environmental/market factors

Assessing Price Elasticity of Demand

measure of the sensitivity of demand to changes in price—the greater the change in demand for a specific change in price, the more elastic demand is

PRICE ELASTICITY OF DEMAND =

% CHANGE IN QUANTITY DEMANDED / % CHANGE IN PRICE

Marginal Analysis

Examines what happens to a firm’s costs and revenues when product changes by one unit

Marginal Revenue

-change in total revenue resulting from sale of an additional unit of product
-Profit maximized where marginal costs (MC) are equal to marginal revenue (MR).

Fixed Costs

costs that do not vary with changes in the units produced or sold

Average Fixed Cost

the fixed cost per unit produced

Variable Costs

costs that vary directly with changes in the number of units produced or sold

Average Variable Costs

variable cost per unit produced

Total Cost

sum of average fixed cost and average variable cost times the quantity produced

Average Total Cost

sum of the average fixed cost and the average variable cost

Marginal Cost (MC)

extra cost incurred by producing one more unit of a product

Breakeven Point

-point at which costs of producing a product equal revenue made from selling the product
-point after which profitability begins

BREAKEVEN POINT =

= FIXED COSTS / PER-UNIT CONTRIBUTION TO FIXED COSTS

BREAKEVEN POINT =

= TOTAL FIXED COSTS / UNIT PRICE - UNIT VARIABLE COSTS

Organizational and Marketing Pricing Objectives

-should be set that are consistent with organization’s goals and mission.
-must be compatible with marketing objectives

-Costs
-Price/quality image of the product or brand
-Selective or intensive product distribution
-Product pricing used as a promotional tool

Channel Member Expectations

-To make a profit at least equivalent to potential profit from handling a competitor’s brand
-To earn a profit commiserate with effort and resources channel member expends on the product
-To receive discounts for volume purchases and prompt payment
-To be supported by producer with training, advertising, sales promotion, and return policies

Internal reference price

price developed in the buyer’s mind through experience with the product

reduction off the list price given by a producer to an intermediary for performing for performing certain functions

Cumulative Discounts

Quantity discounts aggregated over a stated period

Noncumulative Discounts

One-time reductions in price based on specific factors

Cash Discount

price reduction given to buyers for prompt payment or cash payment

Seasonal Discount

price reduction given to buyers for purchasing goods or services out of season

Allowance

concession in price to achieve a desired goal

Geographic Pricing

Reductions for transportation costs and other costs related to the physical distance between buyer and seller

Transfer Pricing

The price of products that one organizational unit charges when selling to another unit in the same organization

Actual full cost

All fixed and variable costs divided by the number of units produced

Standard full cost

Pricing based on what it would cost to produce the goods at full plant capacity.

Cost plus investment

Full cost plus internal cost of assets used in production

Market-based pricing

Market price less marketing and selling costs

Pricing Objectives

-Goals that describe what a firm wants to achieve through pricing.
-Form basis for decisions about other stages of pricing.
-Must be consistent with overall marketing objectives.
-Can support attainment of multiple short-term and long-term goals.

Charging different prices to different buyers for the same quality and quantity of product

Price Skimming

Charging the highest possible price that buyers who desire the product will pay

Penetration Pricing

Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly

Product-Line Pricing

Establishing and adjusting prices of multiple products within a product line

Captive Pricing

pricing basic product in poroduct line low while pricing rel

Premium Pricing

pricing highest-quality or most versatile products higher than other models in product line

Bait Pricing

pricing product in product line low with intention of selling higher-priced item in the line

Price Lining

setting limited number of prices for selected groups or lines of merchandise

Psychological Pricing

Pricing that attempts to influence a customer’s perception of price to make a product’s price more attractive

Reference Pricing

pricing at moderate level and positioning next to a more more expensive model or brand

Bundle Pricing

packaging together two or more complementary products and selling for a single price

Multiple-Unit Pricing

packaging together two or more products and selling for a single price

Everyday low prices [EDLP]

setting low price for products on a consistent basis

Odd-Even Pricing

ending price with certain numbers to influence perceptions of price or product

Customary Pricing

pricing on the basis of tradition

Prestige Pricing

setting prices artificially high to convey prestige or quality image

Professional Pricing

Fees set by people with great skill or experience in a particular field

Price leaders

Products priced below the usual markup, near cost, or below cost

Special-event Pricing

Advertised sales or price cutting linked to a holiday, season, or event

Comparison discounting

Setting a price at a specific level and comparing it with a higher price

Determination of a Specific Price

-After determining a pricing strategy that yields a certain price, the price may need refinement to ensure consistency with pricing practices in the market and industry.
-The way pricing is used in the marketing mix will affect the final price.
-Pricing is a flexible and convenient way to adjust the marketing mix.

Negotiated Pricing

Establishing a final price through bargaining

Secondary-Market Pricing

setting one price for primary market and different price for another market